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George Soros’, Soros Economic Development Fund (SEDF), Omidyar Network, and Google.org today announced that they were working together to create a $17 million (around Rs 68 crore) Small to Medium Enterprise (SME) investment company for India to create job opportunities and spur greater economic participation for a larger segment of the population. This joint investment company is expected to provide capital to small and medium businesses in underserved markets. Most of the existing SME funds make investments in the $3-$5 million range, leaving out a significant portion of this market. The investment company will target this “missing middle” with equity investments between $500,000 and $3.5 million. Many small to medium businesses lack formal funding options because of a market gap between the microloans offered by microfinance institutions and the larger investments of commercial banks and PE funders, said the press release from Google India. […]
Blackstone has acquired 10.4% stake in logistics major Allcargo Global Logistics (AGL) for Rs 242 crore. The PE major has paid Rs 934 per share, a 30% premium on the last 15-day traded price. AGL is convening a shareholders general meeting on March 19, 2008, to seek their approval. On BSE, the stock of AGL rose 8% to Rs 772.50 on Wednesday. AGL’s CMD Shashi Kiran Shetty said Blackstone could buy shares from the market and increase its stake to a shade below 15%. “We will be utilising these proceeds for the proposed capital expenditure to buy cranes and expand our inland container depot (ICD) business,” said Mr Shetty. The deal involves stake sale through equity shares, fully and compulsorily convertible debentures (FCCDs) and warrants. AGL issued 1,000 equity shares of Rs 10 each at Rs 934/share. It also issued 10.8 lakh FCCDs of Rs 10 each convertible into same number of equity shares on completion of 18 months. AGL also issued 15.13 lakh warrants of Rs 10 each convertible into same number of shares at the option of investors within 18 months. The price range was between Rs 934 and Rs 1,284 per warrant. On subscription, investors would have to pay Rs 194 per warrant. […]
After proving to be a bit hit in most Asian markets, private equity (PE) majors are lining up a bevy of ‘mezzanine funds’ for the Indian market. These funds, which are typically debt-dominated instruments with an equity “sweetner”, basically provide medium-to-long term capital to promoters without significant ownership dilution. While from the lenders’ perspective, mezzanine funds offer a measure of downside risk protection, these funds are widely predicted to gain favour with mid-cap Indian firms, where promoters would relish the opportunity of not ceding considerable shareholding while raising funds. ICICI Venture — India’s largest PE firm — is in the process of closing the country’s first mezzanine fund. ICICI Venture’s ‘India Advantage Fund VII’ would offer $110 million in its first round of fund raising, over half of which has already been committed by limited partners. The fund is among the single largest country-focused mezzanine fund in Asia’s emerging markets and the corpus could be scaled up to $1 billion in the second round of fund raising, according to industry sources. Besides, Darby Overseas Investments — the PE arm of Franklin Templeton Investments — has launched the Darby Asia Mezzanine Fund II, which has secured institutional commitments of $300 million and committed investments through an affiliate in Faridabad-based Escorts Construction Equipment Ltd. Kendall Court Capital Partners’ second fund is also said to be eyeing investments in India. […]
The Tata Group, which pioneered commercial aviation in India is getting back into the airlines business. The Tatas have struck a deal with Singapore-based BJETS to launch a private jet company. BJETS has not revealed the size of Tata Group's investment in the company. However, the Tatas will buy 50 private jets for USD 600-million from BJETS. The company expects to start flight operations in May out of Singapore. In India, operations are expected to be based out of the new Hyderabad international airport. The Vice Chairman of the Tata Group is clearly excited about the deal. “BJETS will set a new standard in the way we fly and do business in Asia. The Indian Hotels Company is very proud to be an investor in this landmark venture. This will further underline the luxury experience which the Taj is known for.” Krishna Kumar says. (Money Control) […]
US-based private equity firm Clear Trade is in talks with five entities including PFC to sell up to 25 per cent stake in its newly-launched $12 billion India-focused power and infrastructure fund. Clear Investments Power Infrastructure Fund, which starts with an initial corpus of $1 billion, would invest in the country's upcoming power and infrastructure projects. According to Clear Trade CEO Palak Jain, the firm is in talks with five entities including Power Finance Corp, Morgan Stanley and Axis Bank-promoted Axis Private Equity to dilute up to 25 per cent in the fund. Apart from Jain, the fund would be promoted by Clear Trade Managing Director Deepak Kavadia and Philip Ho, Managing Director of US-based private equity fund Cornell Capital. “We plan to liquidate 25 per cent stake in the fund to two of the five entities,” she told media over phone. […]
The government is considering a sovereign investment fund with an initial corpus of $5 billion to acquire companies abroad. The investment fund may also be used to bolster the country’s energy security by acquiring coal mines and oil and gas blocks abroad. Prime minister Manmohan Singh has issued a directive to the finance ministry in this regard, and an announcement is likely in the Budget, an official said. According to officials, one of the options available to the government is to create a special purpose vehicle (SPV), which will borrow funds from RBI in the form of long-term securities in foreign currency and lend the same to Indian companies at lower rates. Thus, RBI and the government will be able to earn more on forex reserves, which currently fetch average returns of 3.5-4%. The new fund will be on the lines of the infrastructure SPV being set up in London. It is learnt that the decision to form a fund was taken at a recent meeting of the PM’s council on trade & industry. Along with industry leaders, Planning Commission deputy chairman Montek Singh Ahluwalia, finance minister P Chidambaram and commerce & industry minister Kamal Nath were present at the meeting. The sovereign fund is part of the government’s plan to maintain high economic growth. Kuwait Investment Authority, the Government of Singapore Investment Corporation and Temasek Holdings are examples of such sovereign funds. Last September, China floated a $200-billion sovereign wealth fund, China Investment Corp. […]
Indian government's Department of Industrial Policy and Promotion (DIPP) is likely to start tracking the duration of investment, entry and exit patterns of private equity in India, the Economic Times reported, quoting unnamed sources. It however quoted a DIPP source as saying it will not resort to regulatory measures as this could send a wrong signal to investors. Many foreign private equity funds take over company managements rather than staying as only financial investors, with 10-15 pct stake, and the government will monitor the outcome of such management takeovers on the health of the company, the daily added. SEBI had earlier said overseas funds picking up controlling stake in listed Indian firms through the secondary market can lead to asset stripping as identities of many of the foreign investors involved with such funds are not disclosed and the ultimate source of funds is not verifiable, the paper noted. Private equity deals announced in 2007 amounted to 19.03 bln usd, of which Temasek accounted for 2.5 bln usd, the paper said. As many as 386 private equity deals were struck last year with major funds including Temasek, GIC, Blackstone Group , Warburg Pincus, Carlyle Group and Actis Capital the paper said.(Forbes) […]
Disney will acquire an additional 17% for around Rs8.05bn. Disney presently holds 14.85% in UTV Software. It will also make an open offer for 20% more Shares of UTV Software Communications Ltd. climbed on Monday after Walt Disney Co. said it would acquire a majority stake in the Indian media and entertainment company. The US media major is also likely to pick up a minority stake in UTV's new broadcasting venture. As per the agreement, Disney will acquire an additional 93,52,500 shares of UTV Software at a price of Rs860.79. The total investment by Disney in UTV Software would be around Rs8.05bn. Disney presently holds 34,00,000 shares, representing 14.85% of the equity share capital of UTV Software. UTV will also issue on a preferential basis of 45,32,000 warrants convertible into equal number of equity shares to Unilazer Exports & Management Consultants Ltd., one of the promoter group entity at a price of Rs860.79. The total investment by Unilazer in UTV Software would be around Rs3.9bn. UTV Software will issue shares against warrants, subject to receipt of the FIPB approval. […]
State Bank of India's subsidiary SBI Capital Markets plans to set up a $100 million (about Rs 400 crore) venture capital (VC) fund to invest in knowledge-based sectors in the country. The SBI Capital Markets has already entered into a 50:50 joint venture Softbank Investment Holdings of Japan for the fund. The India Knowledge Fund will target specific India sectors including IT, knowledge process outsourcing, clinical research outsourcing, nanotechnology, online and mobile businesses, environmental technology and alternative energy, SBI said in its letter of offer filed with SEBI for its forthcoming Rs 16,736 crore rights issue. The fund will invest primarily in unlisted, high growth companies through initial investments ranging from $3 million to $10 million. India Knowledge Fund will be co-managed by both SBI Capital Markets and Softbank Investment Holdings. […]
The legendary buyout fund firm Kohlberg Kravis Roberts (KKR) is setting up its operations in India, and hunting for its head honcho. The fact that KKR is setting up office here, two years after it announced its first deal by purchasing a 85% stake in Flextronics for $900 million, speaks a lot about India’s prospects in attracting private equity (PE) investments. Since inception in 1976, the fund has done over 150 deals through its offices in New York, Menlo Park, London, Hong Kong and Tokyo, and the list does not include China, India’s closest rival in receiving PE investments. An almost dead IPO market and RBI’s stringent norms for raising money through external commercial borrowings and foreign currency convertible bonds are expected to push India ahead of China in the PE space this year, said Rishi Sahai, director, IndusView, which advises MNCs on business opportunities emanating in India. Last year, India made a coup of sorts by overtaking China in PE investments. The trend continues this year. In January, India got PE investments worth $1.2 billion, surpassing Asian giants like China ($609 million) and Japan ($980 million), according to a report by the Asian Venture Capital Journal. Mr Sahai said India’s numbers stood at $1.3 billion against China’s $375 million. Industry experts expect that the country will end up having PE money of $25 billion this year and $50 billion in 2010. […]
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